خواص ارزشگذاری درآمدها و ارزش دفتری آماده شده تحت قوانین گاپ ایالات متحده در شیلی و آی آ اس در پرو

The worldwide trend toward integration of capital markets heightens the debate on whether international accounting standards (IAS) and US generally acceptable accounting principles (GAAP) are equivalent accounting regimes for cross-border listings. The Securities and Exchange Commission (SEC) operates from the premise that IAS falls below the threshold and mandated reconciliation from IAS to US GAAP. A major concern is that reconciling the IAS accounting numbers to US GAAP when the underlying contracts are formulated based on IAS results in assessment noise in the Ndubizu and Wallace [Ndubizu, G.A., Wallace, R.S., 2003. Contracts valuation assessment noise and cross-border listing of equities on US and UK stock markets. The International Journal of Accounting 38, 397–420] sense. We examine the valuation properties of US GAAP in Chile and IAS in Peru in which contracts and their representation in the financial statements are based on the same GAAP to minimize the likelihood of assessment noise. We find that earnings and book value are value relevant in the two accounting regimes. However, US GAAP as applied in Chile is more value relevant than IAS applied in Peru. The results are robust to alternative specifications, including controlling for cross-sectional and inflation-induced scale effects present in level regressions, tax–book alignment, and other country-specific factors. Further, the results of the study provide evidence that US GAAP is more timely, conservative, and informative about the expected future normal earnings for loss firms than IAS in emerging economies.

We examine the valuation properties of accounting earnings and book value of equity derived from contracts and financial statements prepared under US generally accepted accounting principles (GAAP) in Chile and international accounting standards (IAS) in Peru for the period 1995–1999. In both countries, the home GAAP is used to formulate contracts with stakeholders and to translate contracts into assets, liabilities and equity in the financial statements. The joint use of the home GAAP in contracting and financial reporting minimizes the likelihood of assessment noise in the Ndubizu and Wallace (2003) sense. Because of the cultural and institutional connection between contracts and the home GAAP, the value relevance of the contracts depends on whether the home country’s GAAP maps cultural and institutional components of contracts into financial statements. The failure of the home GAAP to capture and reflect the cultural and institutional components of contracts in financial statements is referred to as assessment noise (Ndubizu and Wallace, 2003), which is value irrelevant. Although US GAAP and IAS appear to be exogenously determined in Latin America, they are used in contracting with stakeholders and in translating the contracts into financial statements in Chile and Peru, respectively. Therefore, we presume that assessment noise is less likely in our research settings. The results of the study provide evidence of the superior value relevance of US GAAP over IAS in emerging economies.1 The Chilean GAAP is generally in line with accounting principles prevailing in the United States (Price Waterhouse, 1994a). The main difference from US GAAP is that price-level restatements are mandatory in Chile (Price Waterhouse, 1994a) but voluntary in the United States under SFAS No. 89. Therefore, we refer to the accounting rules in Chile as the US GAAP regime. In contrast, Peruvian business enterprises follow GAAP prescribed by the International Accounting Standards Boards (IASB).2 Therefore, we refer to the Peruvian accounting rules as an IAS regime. This GAAP also mandates adjustments for changes in the purchasing power of the local currency. The differences between Peruvian and Chilean accounting standards reflect differences between IAS and US GAAP. These differences have aroused a contentious debate on the quality of IAS and whether this accounting regime is an acceptable alternative to US GAAP.3 The New York Stock Exchange and other global stock exchange regulators have pressured the SEC to accept IAS as US GAAP equivalent. Because of mounting pressure, the Commission is considering waiving the 20-F reconciliation requirements if agreed upon improvements in IAS are successfully completed. These improvements were completed in 1993 and the SEC continues to mandate reconciliation from IAS to US GAAP. In contrast, the European Union (EU) mandates member countries to use IAS for cross-border listings without reconciliation. In the same scenario, the Committee of European Securities Regulators (CESR) concluded in April 2005 that US GAAP is IAS equivalent.4Harris (1995), using eight multinationals, provides results consistent with the EU and CESR conclusions. These results are likely to be tempered by assessment noise and limited sample observations. The paradox between US and European security regulators on the quality of IAS raises the importance of our study and the need for further research. Therefore, our paper is timely and contributes to the current debate on the relative quality of the two alternative global accounting regimes. We find that earnings and book value prepared under US GAAP in Chile and IAS in Peru are value-relevant information to investors. However, the Chilean US GAAP earnings and book value appear to be more value relevant than the Peruvian IAS earnings and book value. The results are robust to alternative specifications, including controlling for cross-sectional and inflation-induced scale effects present in level regressions. Our proxy for the cross-sectional scale factor is insignificant in Peru, while the inflation-induced scale factor is significant in all analyses. Therefore, the time-series scale effect (inflation-induced) appears to be more troublesome in market research in emerging and hyperinflationary economies of Latin America. We also provide extensive robustness tests and the results corroborate the findings of higher value relevance for US GAAP than IAS, controlling for tax–book alignment and other country-specific factors. Consistent with Collins et al. (1999), we find that earnings and book value prepared under US GAAP in Chile have valuation properties that are similar to those exhibited by US firms using US GAAP. For example, omitting book value of equity in the simple earnings capitalization model (either in its role as a control for scale effect or as a value-relevant attribute) induces an upward bias in the coefficient on earnings in countries under a US GAAP regime. Therefore, earnings and book value prepared under US style GAAP appear to have consistent valuation properties across advanced industrial countries (US) and emerging economies of Latin America (Chile). When stock price is regressed on earnings for loss firms (omitting book value of equity) the coefficient on US GAAP earnings is significant and negative for Chilean firms. This result is consistent with the evidence reported in Collins et al. (1999) for US firms. When we augment the simple earnings capitalization model for loss firms with book value, the coefficient on US GAAP earnings for Chilean firms is insignificant while the coefficient on the book value of equity is significant. Therefore, the markets rely on book value of equity as a proxy for the expected future normal earnings for loss firms using US GAAP in Chile or the United States. In contrast, we find that when stock price is regressed on earnings prepared under IAS for loss firms in Peru, the coefficient on IAS earnings is insignificant. Also, augmenting the simple earnings capitalization model with book value of equity produces insignificant coefficients on IAS earnings and book value for loss firms in Peru. This evidence suggests that book value is not a proxy for the expected future normal earnings for loss firms that use IAS in Peru. Therefore, the role of book value for loss firms is not a universal valuation property. The observed differences in valuation properties between US GAAP and IAS appear to suggest that the US GAAP is timelier in recognizing economic losses than IAS (income conservatism). Both US GAAP and IAS earnings–returns regressions have coefficients on negative returns that exceed their counterparts on positive returns. However, the US GAAP coefficient on negative returns exceeds the IAS coefficient. Therefore, US GAAP in Chile appears to be more value relevant and has more timely recognition of economic losses than IAS in Peru. The remainder of the paper is organized as follows. Section 2 discusses relevant literature and the market models used in the study. Section 3 describes the sample and presents descriptive statistics. Section 4 presents the results and Section 5 concludes the paper.

The global trend toward internationalization of capital markets has stirred up a contentious debate on whether US GAAP and IAS are equivalent accounting regimes for cross-border listings. The SEC requires foreign registrants to comply with the USGAAP or reconcile the IAS earnings and book value of equity to US GAAP numbers in Form 20-F. The European Union, International Organization of Securities Commissions (IOSCO), American Stock Exchange (AMEX) and New York Stock Exchange (NYSE) have pressured the SEC to allow foreign registrants using IAS as the home GAAP to list on US stock markets without reconciliation or compliance with US GAAP. The European Union and the Committee of European Securities Regulators require member countries to use IAS (IFRS) for cross-border listing. They also consider IAS and US GAAP equivalent accounting regimes.30 The paradoxical accounting requirements for cross-border listing by US and European regulators raise interest on the valuation properties of IAS and USGAAP in settings without assessment noise. Ndubizu and Wallace (2003) document that the SEC mandated reconciliation is likely to produce earnings and book value that have significant assessment noise. If the differences between the two alternative GAAPs are significant, then US GAAP is less likely to capture the cultural and institutional components of contracts formulated based on IAS. For this reason, we select research settings in which IAS or US GAAP is used for both contracting and representing contracts in the financial statements to minimize assessment noise. Also, we examine countries that have similar political, legal, cultural and regulatory environments to mitigate other potential confounding factors. We find that US GAAP and IAS have common valuation properties in our research settings. For example, we observe that earnings and book value combined are value-relevant information to investors in the two accounting regimes. However, US GAAP numbers are more value relevant than the IAS numbers. These results are robust to different specifications, including controlling for tax–book alignment and country-specific factors. Also, positive earnings are value relevant in the two accounting regimes. In contrast, losses prepared under the two accounting regimes have different valuation properties. We observe that while losses are not informative in both accounting regimes, the market relies on book value of loss firms to proxy for expected future normal earnings in the US accounting regime. In contrast, IAS book value is not informative for loss firms in Peru. Therefore, alternative GAAP regimes have different valuation properties for loss firms in our research setting We also find that US GAAP losses in Chile exhibit greater timeliness than IAS numbers in Peru. The greater timeliness is due to greater market sensitivity to economic losses (income conservatism) in Chile than in Peru. Therefore, the Chilean US GAAP has higher quality accounting information than the Peruvian IAS as measured by various measures of timely loss recognition and by association of accounting information with returns and prices.